M A I N   N E W S

Oil price hike in next 48 hours
Govt to reduce custom, excise duties
Tribune News Service

NEW DELHI, Sept 23 — The government today adopted a cautious approach in going ahead with the imminent hike in the prices of oil and petroleum products with the Petroleum Minister, Mr Ram Naik, utilising the day to convince the Union Cabinet and the National Democratic Alliance about the urgency of the measure.

Mr Naik confirmed that the price hike would not be effected tonight while the Cabinet spokesperson and Union Minister, Mr Pramod Mahajan, indicated the hike could come in the next 48 hours.

Mr Mahajan told newspersons after the Cabinet meeting that Mr Naik was not required to get the sanction of the Council of Ministers and the Petroleum Ministry could move on its own in the matter.

However, Mr Naik took the Cabinet into confidence and briefed the ministers about the unmanageable situation of the oil pool account, paucity of funds with the state-owned oil majors and the prevailing scenario in the wake of shooting international prices.

Indicating that the prices of diesel, LPG, kerosene, petrol and aviation turbine fuel would come under review, Mr Naik said, “We have no option but to increase the prices of all five products under the administered price mechanism”.

Mr Naik undertook a similar exercise in the evening at the meeting of the National Democratic Alliance. He more or less managed to convince the members about the need for the hike.

The minister also made it clear he was not in favour of a steep hike and he still preferred a mixture of moderate hike and readjustment of duties on oil and oil products.

“We will go for a mix of increase in prices, cut in duties and oil bonds to reduce the deficit”, he said.

Mr Naik also appealed to the state governments to contribute their bit in mitigating the problems of the common man by reducing sales tax on petro products.

Stating that any further delay in price hike was not possible now, Mr Naik said the government revised the prices of kerosene and LPG last time in March. The government had restrained from passing on the burden of the rapidly increasing international prices.

He emphasised that the increase in prices would be kept to a limit where consumers could bear the burden.

Agencies add: The Petroleum Minister told newspersons, “There will not be any announcement today... it will be made in due course of time,” adding that he was briefing the constituents of the National Democratic Alliance about the difficult oil scenario in the country with global prices surging over $ 36 a barrel.

Sources indicated the government would not hike the prices of the products till Sunday night as the discussions among the constituents would continue till late on Saturday evening.

Emerging out from the Cabinet meeting, the Petroleum Minister indicated the government was making efforts to reduce the impact of hike on consumers by reducing custom and excise duties through issue of oil bonds.

USA to release oil from reserve

WASHINGTON, Sept 23 (AFP) — US President Bill Clinton ordered the release of 30 million barrels of oil from the nation’s emergency reserves to head off shortages as crude prices soar.

Mr Clinton decided yesterday to tap the strategic petroleum reserve (SPR), with winter looming and amid fears of price hikes and shortages of vital heating oil, Energy Secretary Bill Richardson said.

“We need to make sure that American families keep warm this winter and get their heating,” Mr Richardson said in a news conference, adding that heating oil stocks were seriously depleted.

Mr Richardson denied that the decision to tap into the strategic reserve starting Monday was a political decision to help Vice President Al Gore, the Democratic candidate, less than seven weeks before November presidential elections.

“And the reason that we are doing this is not for price, but to deal with disruption, to deal with the problems of extreme shortages.”

Mr Gore has strongly urged the White House to tap into the strategic reserve and has been denounced for playing election politics with the oil crisis.

LONDON (Reuters): Oil prices slumped as US Energy Secretary Bill Richardson prepared to announce plans to release 30 million barrels of crude oil over 30 days from government reserves.

London brent blend crude last traded down $ 1.48 at $ 31.25 a barrel, having lost 1.01 on Thursday after US Vice President Gore made his initial call to release oil from the nation’s strategic petroleum reserve (SPR) to ensure fuel supplies for the winter.

But oil traders were still wary about the price impact of a stock release.

German Chancellor Gerhard Schroeder, meanwhile, blamed oil firms and OPEC for “exorbitant” energy prices and said European governments should not react by rashly cutting petrol taxes.

German inflation data raised fresh concern about the impact of high fuel costs on economic growth, while both Germany and Italy backed a French call for dialogue with OPEC exporters.

NEW YORK: World oil prices were expected to ease on Monday following the decision by the Clinton Administration to dip in to its emergency reserves, an AFD report said.

But traders questioned whether the effect of the decision to pump out 30 million barrels over 30 days from the strategic petroleum reserve (SPR) would amount to more than a quick, temporary fix.